AT&T CFO John Stephens Provides Update to Shareholders
04 Dicembre 2019 - 01:39AM
Business Wire
AT&T Inc.* chief financial officer John Stephens spoke today
at the Wells Fargo Global TMT conference, providing an update to
shareholders.
Three-year strategy. Stephens discussed the 3-year plan
AT&T presented in October. AT&T expects revenues to grow at
~1-2% CAGR from 2020-2022 and EBITDA margins to expand 200 basis
points by 2022. Revenue growth is expected primarily from wireless,
WarnerMedia and Mexico; margin growth is expected to come
primarily from wireless, merger synergies, Mexico and cost
initiatives.
AT&T Mexico’s recent 8-year reseller agreement with
Telefónica Movistar gives the company confidence in Mexico’s growth
opportunities.
AT&T plans to expand its efficiency initiatives to support
its 3-year goal to increase EBITDA margins. Stephens said that over
the last 5 years, the company has achieved annual network cost
savings between 6% and 8%, driven primarily by the move to
software-defined networking, network function virtualization and
automation. This trend of cost reductions is expected to continue
in 2020. To achieve its margin goals for 2020 and beyond, Stephens
said the company has begun several additional cost reduction
initiatives targeting an incremental 4% reduction in labor-related
costs in 2020 or about $1.5 billion.
Capital allocation and free cash flow. Stephens also
addressed the company’s approach to capital allocation. AT&T
will continue to invest in its businesses — both capital and
content — while also supporting continued modest annual dividend
growth and retiring shares.
The company has begun retiring shares and is evaluating a
100-million-share accelerated share repurchase program for the
first quarter of 2020. By the end of 2022, AT&T expects to
retire 100% of the debt it incurred to acquire Time Warner,
targeting a net debt-to-adjusted EBITDA ratio in the 2.0x to 2.25x
range, and expects this to lead to an upgrade in its debt
ratings.
Stephens said AT&T remains on track for full-year 2019 free
cash flow in the $28 billion range. The company expects to end 2019
with a net debt-to-adjusted EBITDA ratio in the 2.5x range.
AT&T has already far exceeded its $6-8 billion goal for
non-core asset monetizations in 2019 and is targeting another $5
billion to $10 billion in 2020, as part of its continuing portfolio
review. These could include sales of regional sports networks,
additional real estate and additional tower receivables. Stephens
said AT&T will continue to access a variety of debt markets and
is also considering a preferred stock offering.
Wireless trends and competitive landscape. Stephens also
discussed AT&T’s wireless business and plans for growth. Growth
in wireless is expected to be driven by network performance and
recognition that the company has the nation’s best and fastest
wireless network1; targeted promotions; and expanded sales
opportunities from AT&T’s FirstNet build.
Stephens said that while the wireless market remains
competitive, he likes AT&T’s position given the company’s
network advantages, including a strong spectrum position; its
FirstNet build; new wireless plans; and the ability to bundle
content — specifically, HBO Max — with owner’s economics.
Entertainment Group. The company’s Entertainment Group
remains on track to achieve its goal of stable EBITDA in 2019, with
EBITDA up 2.3% through the third quarter due to AT&T’s focus on
profitable customers. Stephens also said that the third quarter is
expected to be AT&T’s peak video subscriber loss quarter.
AT&T has about 400,000 customers left on highly discounted
video plans.
*About AT&T
AT&T Inc. (NYSE:T) is a diversified, global leader in
telecommunications, media and entertainment, and technology. It
executes in the market under four operating units. WarnerMedia is a
leading media and entertainment company that creates and
distributes premium and popular content to global audiences through
its consumer brands including: HBO, Warner Bros., TNT, TBS, truTV,
CNN, DC Entertainment, New Line, Cartoon Network, Adult Swim,
Turner Classic Movies and others. AT&T Communications provides
more than 100 million U.S. consumers with entertainment and
communications experiences across TV, mobile and broadband
services. Plus, it serves nearly 3 million business customers with
high-speed, highly secure connectivity and smart solutions.
AT&T Latin America provides pay-TV services across 11 countries
and territories in Latin America and the Caribbean, and is the
fastest growing wireless provider in Mexico, serving consumers and
businesses. Xandr provides marketers with innovative and relevant
advertising solutions for consumers around premium video content
and digital advertising through its AppNexus platform.
AT&T products and services are provided or offered by
subsidiaries and affiliates of AT&T Inc. under the AT&T
brand and not by AT&T Inc. Additional information is available
at about.att.com. © 2019 AT&T Intellectual Property. All rights
reserved. AT&T, the Globe logo and other marks are trademarks
and service marks of AT&T Intellectual Property and/or AT&T
affiliated companies. All other marks contained herein are the
property of their respective owners.
1 Best network based on GWS OneScore, September 2019; fastest
network based on analysis by Ookla® of Speedtest Intelligence® data
average download speeds for Q3 2019. Ookla trademarks used under
license and reprinted with permission.
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Erin McGrath AT&T Inc. Phone: (214) 862-0651 Email:
erin.mcgrath@att.com
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